In a move that crypto experts previously applauded as the dawn of a new era for Ripple Labs, investment manager Tetragon Financial Services led Series C funding into the blockchain firm in 2019.
The round saw Ripple infused with $200 million for its XRP cryptocurrency project but with a clause. Those terms have come back to haunt them as Tetragon wants its money back.
Tetragon’s Redemption Claims Kicked Out
British fund manager Tetragon, which led Ripple’s 2019 funding round, wants its investments back. According to the firm, XRP’s classification as a security by the U.S Securities and Exchange Commission (SEC) has seen a part of its agreements with the digital payments firm contravened, and Ripple must pay back $175 million worth of stock.
The case was brought before Delaware’s Court of Chancery in January 2021. It has now been dismissed. Per the court’s ruling, XRP is no more a security now than in 2019, and since the question was still unanswered, Ripple is not obligated to fulfill the terms of the 2019 agreement.
Ripple stated on Jan. 5 following the lawsuit confirming the Tetragon arrangement but said it was disappointed by the investment firm’s decision to take advantage of the uncertainties surrounding cryptocurrencies in the US. To them, Tetragon has made an “opportunistic move” to profit from an already-charged US crypto environment.
The UK-based investment house had requested for a speedy trial and asked the Delaware court for a preliminary injunction against Ripple Labs and a temporary restraining order against the issuance of XRP by Ripple.
Ripple’s Legal Woes
Ripple Labs has been in the eye of the storm for some time now following a SEC lawsuit that has seen the blockchain-based payments firm struggle to stay afloat in the US markets.
The December 2020 legal bout has already seen Ripple’s XRP delisted from major crypto exchanges in the US. Major partnerships with Moneygram have also been suspended.
Ripple Labs CEO Brad Garlinghouse seems to be taking the offensive. Following a modified SEC lawsuit brought against the embattled crypto-assets, Garlinghouse has filed two separate documents asking the courts to dismiss the SEC’s injunction.
Ripple Labs had initially declined to make a statement before changing its mind in a new filing, explaining why it believes the SEC’s case was ill-conceived.
Ripple believes the SEC’s case against its native token is dead on arrival. To them, XRP shares a common ethos with Bitcoin and Ethereum, which should see it naturally listed under the commodities market and not classified as securities.